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The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) has raised an additional USD 1 billion for its August 2024 bond referencing the Secured Overnight Financing Rate (SOFR), bringing the new outstanding amount to USD 1.5 billion.  The first tranche of this SOFR transaction was issued in July 2019 and

remains the market’s longest ever bond referencing the SOFR.

This reopening responds to investor demand for high quality assets and reflects IBRD’s commitment to bolster the floating rate market linked to SOFR. SOFR is a rate based on transactions in the U.S. Treasury repurchase market and an alternative reference rate to USD LIBOR.

The bond matures on August 6, 2024 and has a re-offer spread of Compounded Daily SOFR +28 basis points (resetting daily and paid quarterly). BMO Capital Markets, BofA Securities, RBC Capital Markets were the joint lead managers of the transaction.

 “A ground-breaking outcome for World Bank’s first SOFR-linked issuance of 2020. This re-opening promotes greater liquidity in what remains the longest outstanding SOFR bond. Issuing beyond the 3-year tenor in $1bn size is a first, and a remarkable development in the early days of SOFR supply. This transaction underscores World Bank’s leadership and innovation in capital markets, and further propels the growth of the SOFR market,” said Sean Hayes, Managing Director and Head of US Syndicate at BMO Capital Markets

“By bringing this SOFR line to a liquid benchmark size, the World Bank continues to demonstrate leadership in the LIBOR transition space. This line is the longest dated SOFR SSA bond and will remain a reference point for the sector as it continues to develop,” said Adrien de Naurois, Managing Director, BofA Securities.

“World Bank’s very successful increase of their SOFR benchmark reinvigorates the quest to build a longer and more liquid curve for LIBOR replacement trades in the USD market,” said Jigme Shingsar, Managing Director, Debt Capital Markets, RBC Capital Markets.

The World Bank issues between USD 50 to USD 60 billion annually in bonds for sustainable development. These range from structured notes to benchmark-sized issuances that support the financing of the World Bank’s sustainable development projects and programs. A key priority for the World Bank’s engagement in the capital markets is to build strategic partnerships with investors and other market participants to raise awareness for development challenges and accelerate opportunities to mobilize finance for development.